Good news and bad for Tata Steel Europe’s non-core businesses

Tata Steel Europe has signed a sales and purchase agreement for Cogent Power Inc (CPI) with Japanese steelmaker JFE Shoji Trade Corporation, a manufacturer of cores for electrical distribution transformers. 

 

Cogent Power Inc is one of five non-core businesses that Tata Steel Europe had earmarked for sale earlier this year as part of its strategy to focus purely on 'strategic markets'. Other non-core operations (Kalzip and Firsteel) have already been sold, the company says.

Kalzip is an aluminium roofing and cladding business based in the West Midlands of the UK. Firsteel coats steel for kitchen bakeware and is also located in the West Midlands of the UK.

Of the three businesses owned by Cogent Electrical Steels, Tata intends to retain Sweden-based Surahammars Bruks AB, which makes advanced steels for electric vehicles. 

However, while Tata has managed to save some 400 jobs at Cogent Power and Surahammars Bruks, it will close Orb Electrical Steels in Newport, South Wales, with the potential loss of up to 380 jobs.

“We have been able to secure the future for almost 400 colleagues in CPI and Surahammars Bruks," said Tata Steel Europe's head of European operations, Henrik Adam. "However, today’s proposal will be sad news for colleagues at Orb in South Wales, he added, claiming it was necessary as it enabled Tata to focus resources on its core business and markets. 

Orb Electrical Steels has been losing money for several years, Tata claims, as it struggled to compete in the market to supply steels used in electricity transformers where customer requirements have out-stripped the site’s capability. According to Tata, converting the site to create steels for future electric vehicle production would cost in excess of £50 million in a highly competitive market where the company faces higher-volume competitors both in Europe and globally.

“Continuing to fund substantial losses at Orb Electrical Steels is not sustainable at a time when the European steel industry is facing considerable challenges," Adam said. "We saw no prospects of returning the Orb business to profitability in the coming years," he said, adding that he recognised it would be difficult news for those affected.

Tata Steel claims it has been unable to find a buyer for its UK-based Wolverhampton Engineering Steels Service Centre, another of the five non-core businesses, which will also close with the possibility of a further 26 jobs. 

Tata Steel says that 'every effort will be made by Tata Steel to mitigate the impact on affected employees including offering alternative employment opportunities where possible at other Tata Steel sites. 

A spokesman for Tata Steel Europe said that Tata Steel Istanbul Metals is still for sale.